Prop. 13 Overhaul in the Wind, Assembly Majority Leader Says

Assembly Majority Leader Thomas M. Hannigan said Wednesday that the time is rapidly approaching for California to make “dramatic” changes to Proposition 13 so that the 1978 property tax-slashing measure is “more equitable” to home buyers and less restrictive on local government.

Conceding that there is little sentiment in the Legislature to tinker with the voter-approved initiative at this time, Hannigan maintained that there is, nonetheless, strong support for modifying a follow-up tax limitation measure that placed a constitutional lid on spending by state and local government.

“I see evidence that people’s attitudes are changing,” the Fairfield Democrat said at a breakfast session with The Times Sacramento Bureau. “We’re talking about a time when the rubber meets the road and we have to raise taxes and find revenue in some way.”

A rising star in the Legislature and former chairman of the Assembly’s Revenue and Taxation Committee, Hannigan cited as evidence of this shift in attitude increasing public pressure to spend money on certain popular programs, particularly education.

Democrats, Hannigan said, can broaden their base of support by embracing those programs. Accordingly, he predicted, the Democratic-dominated Legislature will side with state school Supt. Bill Honig in his increasingly bitter feud with Republican Gov. George Deukmejian over how much to spend on the state’s K-12 schools.

“There’s no magic to it,” Hannigan said. “If you want education, for example, at a certain level and it costs dollars, you have to do something to get it. And I think the public will be receptive to that.”

Modifying either Proposition 13 or the government spending limit would require a constitutional amendment. That would take a two-thirds vote of the Legislature and approval by the electorate. Most Republican lawmakers, along with Deukmejian, oppose any such effort.

Hannigan was named majority leader by Assembly Speaker Willie Brown (D-San Francisco) in the aftermath of the November elections which saw Democrats in the Assembly lose three seats to Republicans. The appointment also came amid continuing concern over the influence of campaign contributions and a still evolving sex-money-political favors scandal surrounding the activities of convicted political corrupter W. Patrick Moriarty.

Hannigan, who has a reputation in the Legislature for honesty and as a “good government” advocate, downplayed the political significance of his appointment. But he acknowledged that it is widely seen as an attempt to reach out to “other factions” in the Assembly, some of which have been privately critical of Brown’s leadership.

Yet Hannigan said whatever dissension there is among Assembly Democrats does not threaten Brown, in part “because no one is making a move to replace him.”

In calling for modification of Proposition 13, Hannigan--who opposed the initiative when it was on the June, 1978, ballot--said he is more convinced than ever that “there is nothing fair about it; nothing equitable about it.”

Proposition 13 caps the tax rate on property at 1% of its value and limits increases in assessed value to 2% each year. But properties are automatically reassessed at market prices whenever they are sold or transferred--a process that has created tremendous differences between the tax bills of those who keep their homes and those who sell often.

Lawmaker Saw Taxes Rise

That problem, Hannigan said, came into focus when he recently decided to buy a smaller house and discovered that his property taxes would rise to $2,250 yearly from $600.

Hannigan said he favors maintaining the 1% limit on property tax rates but would support efforts to reassess all properties on a regular basis, perhaps every five years. He also said he supports eliminating a provision of the law that requires a two-thirds vote of the electorate before most local taxes can be increased.

Other Democrats in the Assembly have yet to embrace his tax proposals, but he asserted that “there’s a time coming when I think the public will have an open mind about doing something dramatic with property taxes.”

Expects Support

Meanwhile, Hannigan said he expects strong support for at least one of several measures introduced this session that would loosen the constitutional spending limits imposed by voters in the aftermath of Proposition 13’s overwhelming victory.

The so-called Gann limit, drafted by tax crusader Paul Gann and approved in 1979, allows spending to increase at a pace governed by the rate of population growth and either the national inflation rate or the increase in per-capita income--whichever is lower.

Hannigan said he is drafting legislation that would change the formula to base spending on which of the two factors--the inflation rate or growth in income--is higher. Honig and several other politicians, mostly Democrats, have called for similar measures and Hannigan said he expects such a proposal to appear on the 1988 ballot.